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Co-op: Emission rules could double rates

David DeMille, STG
9:47 p.m. MDT April 23, 2014

Power lines attached to power poles of a variety of shapes and sizes stretch through the hills west of Central near the substation on the western edge of the town Sept. 4, 2013.
(Photo: Jud Burkett / The Spectrum & Daily News)

ST. GEORGE – Electric utilities are trying to rally local support in their fight against proposed regulatory changes that managers say could more than double users’ power rates.

At the same time, environmental groups are arguing that rate changes should be minimal, and well worth the improvements to the environment and public health.

The Environmental Protection Agency is in the midst of rolling out two new rules addressing emission standards, part of President Barack Obama’s push to actively address climate change.

The first, a draft released in September, would limit carbon pollution from future power plants. The second, a draft expected to be released by June, would apply similar standards to existing plants.

It’s part of an ongoing debate between providers who argue that new regulations will close plants, eliminate jobs and increase rates and advocates who see rule changes as essential to lessening emissions and combating global warming.

“If they were to establish this rule for existing plants, essentially we’d have to cut our energy production in half, and go out and replace that with something new, and that new would be expensive,” said LaDel Laub, chief executive officer of Dixie Power, a rural electric cooperative that provides power to about 15,000 Washington County residents. “Our other options are gas plants, renewables, other sources, and the wholesale costs are more than double. Plus, you’ve got to keep paying for the old plant.”

Utility managers are mobilizing to drum up public support to fight the rule changes, arguing that some of the ideas involved, such as reducing emissions by capturing and storing carbon, are still years away from being commercially viable technology.

Dixie Power is soliciting its members to sign on to a nationwide petition at Action.coop that asks the EPA to back off the proposals, which utility managers say run counter to the president’s past assertions that he supports an “all-of-the-above” energy strategy that includes continued use of coal.

Coal provides nearly 40 percent of the nation’s electricity, but power plants account for about a third of U.S. greenhouse gas emissions, and Obama has promised action to combat the country’s contributions to climate change.

EPA administrator Gina McCarthy has been visiting facilities across the country for what she has called listening sessions to get a ground-level view of the potential impacts of the proposed rule changes.

As part of the Deseret Power Electric Cooperative, Dixie Power members enjoy some of the nation’s lowest power rates, thanks largely to the coal-fired Bonanza Power Plant in northeastern Utah, which supplies about about 80 percent of the cooperative’s power.

However, the plant releases roughly twice the amount of carbon dioxide as the limit anticipated to be part of the new rule, which, if it follows the proposed rule on future plants, would be 1,100 pounds of carbon dioxide per kilowatt hour.

Laub said the associated costs of transitioning to other sources would be pushed onto members’ power bills. He argued that those costs could be mitigated if the cooperative was allowed to make a slower transition, noting that smaller-scale changes already have started to take place with moves to hydro, solar, geothermal and natural gas resources either already established or a part of future plans.

The Bonanza plant is halfway through its 50-year license period, and Laub argued that it should be allowed to finish out its life cycle.

“It appears this is a little bit of an attack on coal, but it is what it is,” Laub said. “What we’re saying is just give us some time to work through this, to make this transition.”

Others aren’t convinced that the impacts would be severe.

The Center for American Progress, a left-leaning think tank based in Washington, D.C., compiled a list of instances where new regulations spawned concerns about rate increases, but the actual impact was negligible.

Utility leaders warned of rate spikes in the wake of the 1970 Clean Air Act, but a 1982 evaluation by the Congressional Budget Office concluded that the impact was low.

New scrubber regulations required in 1977 raised similar concerns, but the National Commission on Air Quality determined that the predictions were wrong.

CAP’s own analysis of utility rates in 2009 found that they were 19 percent lower than industry leaders had predicted when an acid rain bill was passed in 1989.

“Far from doing harm, these past air-pollution-protection measures helped safeguard millions of people from smog, acid rain, and soot particles,” the authors state.

Sarah Wright, executive director of Utah Clean Energy, said she hasn’t seen any viable figures that would indicate a need to double rates. She said a key element to consider would be the way the standards are applied, as the EPA is likely to allow the new standards to be applied across the whole of the power system. Utilities could lower their emissions simply by improving efficiency, she argued.

“With any standards that the EPA promulgates, their job is to look after public health, and to look to balance that with cost-effective means,” Wright said. “There has been regulation at power plants for things like mercury, arsenic, lead, soot – it’s not new to recommend emissions standards.”

The EPA is expected to issue broad federal standards, with each state then tasked with developing its own plan to enforce them.

There likely would be legal challenges though, as well as opposition from within Congress, from both Republicans and Democrats.

One proposal, from West Virginia Democratic Sen. Joe Mankin, only would allow the EPA to impose regulation standards that have already been achieved for 12 straight months at six existing domestic power plants.

That bill, co-sponsored by Rep. Ed Whitfield, R-Ky., has drawn some support from other Democrats, mostly from energy-producing states.

Follow David DeMille on Twitter, @SpectrumDeMille.

A sample of residential

power rates

Dixie Power: 5.3 cents per kilowatt hour (kWh).

St. George Energy Services: 7.5 cents per kWh up to 800 kWh, then 8.13 cents per kWh.

Rocky Mountain Power: 8.8 cents per kWh up to 400 kWh, 11.5 cents kWh up to 600 kWh, and then 14.5 cents per kWh (May through Sept.). 8.8 kWh up to 400 kWh, and then 9.9 cents per kWh (Oct. through April).

Utah average: 10.06 cents per kWh.

U.S. average: 11.88 cents per kWh.

Sources: company websites and the U.S. Energy Information Administration.

Online

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A draft version of one of the Environmental Protection Agency’s proposed rule changes for emissions standards is available at www.epa.gov.

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Get information on Dixie Power and its efforts to combat the rule changes at www.dixiepower.com.